Wednesday, December 30, 2009

Pachuri, acting and Actis

Today Richard has focused on Pachuri's TERI-Europe—a registered charity with an expenditure that far outstrips its incoming resources. The company secretary is a certain Dr Ritu Kumar—herself a woman with, it seems, considerable business interests in her own right. In particular, I was interested by this paragraph...

But this cv also has Dr Kumar as a senior adviser on environmental, social and governance issues with Actis UK—a private equity firm investing primarily in Africa, China, India, Latin America, South and South East Asia - where "she has advised on weaknesses and opportunities in health and safety, as well as environmental, social and business integrity since 2006." The company handles $7.3 billion in and has over 100 investment professionals in nine offices worldwide.

Thus far then, with a great deal more to cover in what becomes an increasingly murky story, we have a charity which is a company wholly owned by Dr Pachauri and Dr Kumar, the latter who not only works for TERI-Europe but also for a government-funded NGO, the Commonwealth Secretariat and a private equity company handling billions in investment funds.

Anyone who is a regular reader of Private Eye will be familiar with Actis, a firm set up by the Commonwealth Development Corporation (CDC)—whose directors were then allowed to buy the firm for a ludicrously small sum of money.

In 2004, the then Development Secretary Hilary Benn carved out the fund management operation from the government-owned develpment fund CDC. The fund's function is to invest UK aid in companies in developing countries. The private equity firm created to do this, Actis, was set up in swanky riverside offices using £5m of public money while 60% of the new "limited liability partnership" was sold for £373,000 to former CDC managers, led by Paul Fletcher. One hell of a good price for managing £1bn of state funds without facing any competition whatsoever.

Fletcher and his pals quickly recouped their outlay. Actis reported profits of $14m in the first year, and that was after accounting for its 192 employees being paid an average of $220,000 each and senior partner Fletcher pocketing $1.84m. Actis will tell you that the government is entitled to 80% of their profits but that arrangement ends in 2009. Furthermore, in a recent public accounts committee report, Fletcher and Co's share (bought for £393,000 remember) was valued at over £200m, and possibly as much as £600m.

So why was Actis sold for so little when it was quite obviously worth so much more? Private Eye has asked to see the calculations that led to the 2004 valuation of £393,000 and how much the still publicly-owned CDC pays Actis to manage the fund. However, the Department for International Development's Openness Unit (an oxymoron if ever there was) and the Shareholder Executive have both refused to release any details. The DfID claimed the valuation calculation was "commercially sensitive" and revealing it was not in the public interest. They did reveal however, that "the calculations were undertaken by KPMG Corporate Finance Consultants, appointed by CDC Group plc to provide an objective opinion."

OK, so that's the same CDC Group who's chief executive Paul Fletcher and other senior managers would be the buyers of the new company. Conflict of interest?

Then, in Private Eye it is reported that the previously government owned Commonwealth Development Corporation (CDC) - which invests UK aid in firms in developing countries - has been sold off to a company called Actis (created by former CDC managers!). They picked up the deal for £373,000 (which, says Private Eye, was "a bargain price for managing, without facing any competition, £1 billion of state funds"). In the following year Actis reported profits of £14 million ("..and that was after the firms 192 employees had been paid an average of $220,000; the senior partner Paul Fletcher "trousered" $1.8 million). This is taxpayers money. And that's just the tip of the iceberg. The company is worth more than £200 million and possibly as much as £800 million: "In two years the 20 or so partners in Actis have seen their money grow by at least 5000%...". Surely this is something the Serious fraud Office should be investigating? It strikes me as a lot more serious than "cash-for-peerages". The Minister responsible was nice guy Hilary Benn.

Indeed: he's a crook if ever there was one—always beware of the "nice guys". You can have that advice for free, by the way.

EDFI is the Association of European Development Finance Institutions, a group of 16 bilateral institutions which provide long-term finance for private sector enterprises in developing and reforming economies. Since its foundation in Brussels in 1992, EDFI's mission has been to foster co-operation among its members and to strengthen links with institutions of the European Union.

EDFI is based in Luxembourg (where else?), and funding for the EDFI is provided by its members and, in large part, by the European Investment Bank—this last has provided at least €100 million since May 2009.

In May 2009, EFP was replenished with €230 mln, €100 mln provided by the EIB and €130 by the EDFI members.

Under its previous mandate which expired in April 2009, EFP has approved financing to 25 projects in 11 ACP countries for a total amount of €280 mln. in the following sectors: Agribusiness, Banking, Communication, Health, Hotels, Housing, Industry, Infrastructure, Power and Air Transport.

IREDA is a Public Limited Government Company established in 1987, under the administrative control of Ministry of New and Renewable Energy (MNRE) to promote, develop and extend financial assistance for renewable energy and energy efficiency/conservation projects with the motto : " ENERGY FOR EVER "

The link is a little tenuous, I'll admit, but took less than ten minutes of derisory 'net searching to establish—maybe Richard can do better. On the face of it, however, it does seem that all roads (not to mention millions of Euros) do lead to millionaire businessman Rajendra K Pachuri...

I don't think the link is tenuous at all and well done. It is the very tenuousness which gives it its verisimilitude because it is the "director twice removed" method which is how they get away with it - Veronique Morales is a good example [former Tesco].

Hey, you guys would probably know, being internet geeks and all that....

Would it be possible for Dr R.K. Pachuri to sue me for defamation, if I stated on my humble blog that he was a lying, cheating, self-interested, insider-trading, scumbag criminal fraudulent cunt of an arsehole?

Not that I have any intention to do so, of course, this is merely a rhetorical question, and quite probably protected by legal professional privilege.

Your advices would be appreciated, and thank you once again RAEN and DK for your tireless efforts against these monstrous attacks upon our way of life.

Some one may wish to correct me here, but it is my understanding that if you were to make the statement that the good Doctor is what you question then you do lay yourself open to litigation. However, it is also my understanding that if you were to say "It is my belief that Dr R. K. is ........." then you are fine. After all, it is incontestably true that that is your opinion, and you are not stating your opinion as fact.

You can't be sued for a mere opinion: de gustibus non disputandum. Opine away.

I think I'd probably leave out riskier specifics like insider trading and criminal (he hasn't been convicted yet) but lying, cheating, self-interested, scumbag, fraudulent and cunt are obviously fine, being based entirely on facts in the public domain.

The businesses this State body has involvement with are listed here - combined turnover of £21 billon.

Amongst the usual suspects (BNFL, Royal Mail etc) there is another company that has a similar remit to Actis:CDC

quote: "CDC‘s objective is to invest in the creation and growth of viable private businesses in poorer developing countries"

This was formed in 1948, and now acts as a sovereign wealth fund: "CDC is now a fund-of-funds investment company, whose funds predominantly make equity investments in the poorer countries of the developing world"

2007 turnover: £629 millionoperating profit: £621 million

With such a large amount of money sloshing around, it would be interesting to start digging on CDC and find out what exactly they are "investing" in...

Lets cut to the chase here - under the guise of eco-friendly "sustainable development", British money is being funnelled through Indian mining companies to exploit third world resources, thus bypassing any restrictions , such as labour laws, that would be imposed on British companies.

Therefore, facades like "fair trade" or "sustainable development" beloved of the Geldofs and Bono's of this world, are mere charades, much like global warming hysteria.

Private Eye, earlier this year: "WHILE the European commission and big member states like France and Germany plan to crack down on tax havens (while Britain pretends to), the EU's house bank, the European Investment Bank (EIB), is busily lending to companies established in... tax havens.

In some cases, senior EIB officials sit on the boards of those self-same tax haven-registered companies. Particularly notable is EIB lending for supposed development projects in poor countries. In reality, this "development assistance" is a scam under which low-cost public capital is channeled to private equity firms that look for projects with juicy returns of 20 percent or more, before remitting the proceeds to low or no-tax and minimum transparency jurisdictions such as Mauritius.

This will come as no surprise to Eye readers who have followed the CDC/Actis scandal. Indeed, Britain's CDC Group, formerly the Commonwealth Development Corporation. is both a beneficiary of the EIB's largesse, and a lender to many of those same tax dodgers.

For example, in June the EIB agreed a $15m loan to Shorecap International Limited, a private equity outfit specialising in microfinance, in which CDC also invests. Cyrille Arnould, the EIB's head of microfinance, is one of Shorecap's directors. The firm, which boasted in its 2007 report of an average 23 percent rate of return, is incorporated in the Cayman Islands.

Arnould is also on the board of Africap, a Mauritius-based investment company, which received €5m from the EIB in 2007. Mauritius, a tiny Indian Ocean island with 103m people, is a favourite haunt of so-called development funds, including Adlevo Capital, Africinvest Limited, GroFin and Leapfrog Investments. These firms alone have shared €65m of EIB money in the last 12 months. Mauritius is the source of an extraordinary 44 percent of foreign investment in India underlining the extent to which development assistance has in fact become a tax avoidance scam.

During 2008 the ElB also agreed loans totalling €53m for funds run by Aureos Capital Limited, also Mauritius-registered. Until it was sold to its managers at a knock-down price (see Eye 1240), Aureos was a joint venture between CDC and Norway's development fund Norfund, which has imitated CDC's tax haven strategy. The difference between CDC and Norfund, however, is that the Norwegian government has now told Norfund to stop investing in tax havens. Counter Balance, a campaign group that has analysed EIB lending to tax dodgers, noted that Norway finally came round to following "the logic that development funds should not support tax evasion". When will Britain, and the EIB, do the same?"

a tad off topic, but Actis's immediate neighbours at More London Riverside are these guys: Climate Change Capital - who are: "an investment manager and advisor specialising in the opportunities generated by the global transition to the low carbon economy".

Not much OT Dabble:http://www.climatechangecapital.com/people/andrew-aldridge.aspx

Andrew Aldridge is a Director in the Carbon Finance team, where he is responsible for the development of the renewable energy and energy efficiency portfolio.

Before joining CCC, he founded EM Energy Solutions, a boutique consultancy providing project development and investment management advice to private equity funds operating in Europe, Middle East and China.

Prior to this, Andrew was a director at Actis (formerly CDC Capital Partners), an emerging market private equity fund with US$1.5 billion under management, where he managed a US$350m portfolio of investments in energy and utility companies. Andrew is a chartered accountant and graduated with a BSc(Hons) in Physics from Imperial College, London.